THIS FIXES THE PROBLEM! THANKS MarvinMartian!!!!!
Here are more detailed instructions.
Follow these steps:
1. Put in the install cd into the drive.
2. Go to "my computer" and right click on the drive with the cd and click "open"
3. find the "magic-i" folder and copy it to your desktop.
4. in the magic-i folder, run setup and choose the uninstall option. (this should uninstall everything from arcsoft)
5. reboot
6. Go into the magic-i folder on your desktop and RIGHT click on the "Setup" application.
7. Click "troubleshoot compatablity"
8. choose "troubleshoot program"
9. Choose "The program worked in earlier versions....."
10. Then choose "windows vista Service pack 2" and click next
11. Then choose "start program" and in about 10 seconds the installer will pop up.
12. Install the program.
That's it. It should work when you click on the magic-i3 icon on your desktop.